ACD, from what I can see, is structural method. Your signals are your own. ACD is a good way to look at, and filter, some of your own signals. The method forces one to keep price action in mind at all times. It keeps one from trading indicators rather than price, which most all newbie traders do. With ACD as a template, price itself is the indicator.
Sure, and that's solely how I'm approaching it (hence the term "lens"). The point I'm making though, which I can't tell if it is being missed, is that there is certainly a <i>wrong</i> way to apply the theory. I think that idea is germane to any method (outside of mysticism).
Some more meat for the grill. Does anyone see a possible monthly A Up in live cattle on your charting setup? <img src="http://finviz.com/fut_chart.ashx?t=LC&cot=057642&p=d1"> Or cotton? <img src="http://finviz.com/fut_chart.ashx?t=CT&cot=033661&p=d1"> Or is my lens broke? Just testing the waters here. Ignore this if I'm off in left field.
Well, that just the thing, and the beauty of the method. There is no wrong way to apply it. The only wrong way to apply is if you don't do it. The point is that, according to your own rules, cattle makes a monthly A up. If it is a good A, so much the better. You then pan in to look for a good place to get long because you know you have price behind your back. ACD from what I can glean is meant to force a trader to trade less and not be countertrend when they do. So it is not what number cattle made a monthly A. Your number is your own. It is that price action caused cattle to meet your monthly A up.
Here is an example. Just a few minutes ago, on the daily chart I received a buy signal from the EURUSD in the form of a momentum change on my MACD. So let's verify this with ACD. 1. Price is below the pivot range. 2. Price has not made MY personal A up. I will have a good A up at 4197. I got the signal at 4010. Lemme check the weekly chart. Top of the weekly pivot range is 4341 Top of the monthly pivot is is 4266. So, 4342 is the place where there will likely be more buyers than sellers and I will get long there. That is how I use ACD. That entry point is 300+ pips away for a reason. So ACD makes it much harder to get long than short in this particular environment. This slows down the pace that trade at, and makes sure that price is lined up on all the major time frames. If I take that trade and immediately get stopped out, I can watch for a C down for that calendar day. Best, we can discuss trade anatomy because everyone will use ACD differently.
I have read it twice. For a veteran trader who has actually put some work into market mechanics, it is a quick and easy read. Newbies and some intermediates will have issues with it because they are a looking for the secret sauce. The magic number. The special time frame. All the while not realizing that the process is the secret sauce. Five years ago I would not have gotten what I needed to out of this book, and Fish is a great human being for writing it.
RGC Trader, I see exactly what you're saying. Yesterday I posted that I was looking at modifying my OR. It wasn't because I thought it should be a half day versus a full day, but rather because I thought the day I might be using was less significant, (TO ME) than another time frame I'm considering. I'm really still testing it all out here, (only got the book about 2 months ago, and have read it about three times thus far). One way or the other I appreciate the contributions of everyone here and since reading ACD have been impressed with my results.
Samsara, One thing to keep in mind when looking at longer-term commodity charts is the "roll effect." See those big gaps in the cattle chart? They don't really exist as that represents the difference between the expiring contract and the next contract. To get a true long-term picture, you can either chart back-adjusted data (which costs either $$ or time), or chart just the current front-month. You won't get as long a history, but you see what is actually happening with price action. Barchart.com has a "daily contract" setting for this. By the way, this is a great thread.
I hear ya -- keep in mind I've coded the indicator in eSignal. I'm not using ACD on a barchart.com img